In January and February, my colleague, Bob Wagman, wrote about complications related to provisions on suspension and debarment in the Consolidated Appropriations Act of 2012 (Pub. L. 112-74) (1/18/12) (2/23/12). The provisions in the 2012 Appropriations Act were all premised on the conviction of a corporation (or in certain provisions, its officer or agent) of a felony criminal violation. This month we look at a proposed bill that would mandate suspension (not debarment) for mere allegations of fraud, among other things.

Section 113 of the Act provides for the automatic suspension of a contractor in three situations:

(1) If a contractor is charged with a criminal federal offense related to the performance of a
contract related to “overseas contingency operations” for the Department of Defense,
Department of State, or U.S. Agency for International Development.

(2) If the head of one of the above named agencies makes a final determination that the
contractor failed to pay or refund amounts due or owed to the federal government in
connection with an “overseas contingency operation.”

(3) If the federal government alleges fraud against a contractor in a civil or criminal proceeding related to a federal contract, whether or not connected to “overseas contingency
operations,” and whether or not the alleged acts were committed by the contractor, its
employee, affiliate, or subsidiary, or any business owned or controlled by the contractor.

For purposes of the proposed legislation, an “overseas contingency operation” is a military operation that is either (a) designated by the Secretary of Defense as a military operation “in which members of the armed forces are or may become involved in military actions, operations, or hostilities against an enemy of the United States or against an opposing military force” or (b) a part of a war or national emergency declared by the President or Congress that results in “the call or order to, or retention on, active duty of members of the uniformed services” if the operation involves “actual or potential hostilities against an enemy of the United States or against an opposing military force.” 10 U.S.C. sec. 101(a)(13); Act sec. 3.

The mandatory nature and broad reach of the proposed legislation has drawn significant criticism and concern, leading to questions about the likelihood that the bill will make it out of the Committee on Homeland Security and Governmental Affairs. If the proposed legislation does make its way out of committee and eventually into law, contractors and agencies could be impacted in their ability to contract and subcontract as charges, agency determinations, and allegations are often made early in a fact finding process and may take time to reach resolution.

The Comprehensive Contingency Contracting Reform Act of 2012 responds to recommendations from the U.S. Commission on Wartime Contracting in Iraq and Afghanistan, a panel created by earlier legislation sponsored by Senators Webb and McCaskill, which issued a final report to Congress in August 2011. Recommendation 12 of the report (at pages 10-11) discusses matters of suspension and debarment.

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